GCP Infrastructure Investments Ltd on Friday said its net asset value declined in its recent quarter, but that its portfolio is still meeting expectations despite declining electricity prices.

The Jersey-based investment fund, which specialises in UK infrastructure projects, said its NAV at June 30 was 110.02 pence per share, down from 112.24p at March 31.

In London, shares in GCP were down 0.6% at 75.56p on Friday.

GCP said the NAV decline was mainly due to increases in discount rates, which it applied across its portfolio’s supported living, private finance initiative and renewable energy sectors. This was to reflect higher inflation and base rates, and market transactions suggesting that equity pricing is being affected by the rising cost of debt.

The fund added that its cash distributions from renewables investments have continued to decrease thanks to further reductions in electricity prices. It said these were driven by declining short-term power prices, but partially offset by the increased long-term forecast and by a strong performance from its hedging arrangements.

Despite this, GCP said its portfolio’s performance is still ‘materially in line’ with its expectations. Additionally, as of June 30 it said it has repurchased 5.9 million shares under the buyback programme announced on March 14.

‘The company’s mature, diverse and operational portfolio provides defensive access to income against a backdrop of market volatility and uncertainty,’ GCP commented.

It added that ‘the long-term and structural demand for infrastructure, and particularly infrastructure debt, offers investors an attractive exposure to an asset class whose performance is non-correlated to wider markets and benefits from long-term and partially inflation protected income.’

GCP also declared a 1.75 pence per share interim dividend, down from its 3.5p interim declared on June 21.

GCP said it is suspending its scrip dividend alternative, on the grounds that this would not be in shareholders’ best interests while the fund continues to trade at a discount to their NAV. It will consider offering the scrip dividend for future quarterly payouts.

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